Today, it is uncontroversial to point out that a leading university of the social sciences might be compromised by accepting money from the family of a pernicious dictator. Saif Gaddafi’s bellicose statement last week in support of his father’s regime in Libya has seen to that. But when the decision was taken – only seven weeks ago – the calculation must have looked very different.

The LSE’s student newspaper provides an account of a carefully-weighed, process by the LSE’s governing body. Reading the report, it is easy to imagine how a committee could rationally reach the decision it did – even though Professor Fred Halliday, the LSE’s own authority on the Middle East, had warned against it. Britain was at at the forefront of a rapprochement with the Libyan regime. The LSE, which prides itself on its internationalism, was an enthusiastic participant in the process. Saif Gaddafi, an alumnus of LSE, was regarded as a force for progressive change. Given the global competition for funds to higher education, the LSE’s council would have seen the benefits of receiving the funds, with the necessary guarantees of academic freedom. But it saw no particular reason to explore the contradictions between its aspirations as a seat of learning and debate and the provenance of the Gaddafi money (“which by definition had to be stolen from the Libyan people” according to Nick Cohen in The Observer). Indeed, Professor David Held, of the LSE’s Centre for the Study of Global Governance, assessed that “the principal risk of acceptance was reputational” – as if this was a negligible matter set against the financial upside.

In his interview on Radio 4, Howard Davies executed a classic attempt to contain the damage to the LSE’s reputation that is now unfolding:

“We looked at the pros and cons of engaging with someone like Saif Gaddafi and with the problems in North Africa and we decided that we would do so. In retrospect we can say that, knowing what we know now and how he has behaved in this crisis, that’s a judgment that we might have made differently.”

His use of the urbane language of risk assessment tries to minimise the significance of the decision – it was a business calculation which didn’t pay off. But it conveys no sign that the LSE has learned any lessons about the appropriate boundaries of its relationships with autocrats. As a result, as Times Higher Education notes, the LSE is caught in “an ethical and public relations quagmire”. Even the integrity of the PhD conferred on Saif Gaddafi has been called into question.

The suspicion is hard to dispel that the LSE allowed its financial interests to cloud its moral and academic judgment. The longevity of Gaddafi’s brutal regime stands against Howard Davies’ assertion that it is only what we now know that makes the LSE’s relationship with Libya inappropriate. Of all institutions, one might expect the LSE to recognise that the dynastic nature of despotism would make association with Saif Gaddafi risky. Here’s Gideon Rachman in the FT:

“The whole episode suggests that the hope that a western education will convince a despot’s children to change the system they have inherited is often misplaced. Bashar al-Assad spent many years in London training as an eye doctor and working in unglamorous NHS hospitals. He is clearly an able man, who was prepared to eschew the playboy lifestyle. But when the time came to assume the mantle of the Assad dynasty, Assad junior did almost nothing to dismantle the dictatorial, Syrian security state.”

The unease about the cosiness of its relationships with the Gaddafi family will not be allayed by this video of the LSE putting out the welcome mat for the Colonel.

The inevitable role of social media in bringing to light the skeletons in the cupboard is possibly something the LSE council didn’t factor into its deliberations on reputational risk. As John Naughton comments, the LSE must be wishing YouTube had never been invented.